John D. Rockefeller and Economic Social Darwinism
John Davison Rockefeller was born in 1937, at his family's farm in Richford, New York. His family eventually moved to a farm near Cleveland, Ohio. He was raised as a Baptist during his childhood and religion became very important to him. Once Rockefeller left school, he became an accountant for a local grocer. His employer was extremely impressed and pleased by his knowledge of business and money. Throughout his life, Rockefeller was greedy. By 1859, with money he had saved and a loan from his father, he formed a commission business with a partner, Maurice B. Clark. Later that year, the first oil drill was used in Pennsylvania, forming the petroleum industry.
Cleveland eventually became a major city in the petroleum industry, and Rockefeller and Clark entered the business as oil refiners. With Samuel Andrews, a new partner, who had experience in oil refinery, they formed Andrews, Clark & Co. The partners (there were currently five) had disagreements in 1865 and decided to sell the company to the highest bidder. Rockefeller bought the company for $72,500 and, along with Andrews, created Rockefeller & Andrews.
In 1870, he organized The Standard Oil Company. By 1872, Standard Oil controlled nearly every firm in Cleveland. During its heyday, Standard Oil controlled pipelines, cars, tankers, and groceries along with the main components required to refine oil. Rockefeller showed no compassion as he slowly eliminated nearly all competition from his region. His employees worked long days for low wages, and his competitors were either purchased or driven out of business. He was not concerned with the well-being of anyone else in or with ties to the oil industry.
In 1882, Standard Oil merged with Standard Oil Trust. The capital of the new company was $70 million dollars. Ten years later, the Standard Oil trust was disbanded by a court decision in Ohio. Standard Oil controlled nearly three-fourths of the United States' petroleum industry in the 1890's. Rockefeller retired from active leadership in 1896, but reserved the title of president of Standard Oil until 1911.
During his reign, Rockefeller used many underhanded techniques to stay at the top of his industry. He required that employees of Standard Oil remain silent on the subject of what they earned and the company's profits. He was also known to use bribery and even sabotage when he felt it necessary. Rockefeller seemingly preferred to control things from the ground up, by owning or controlling every aspect of his industry.
In 1872, Rockefeller helped created the South Improvement Company. This company was used in a scheme to fix railroad rates for Rockefeller's competitors, giving members of the South Improvement company large rebates from the expensive shipping charges. Rockefeller required railroads who wanted to work with Standard Oil to give him detailed reports on all of his competitor's good which were transported. He also hired spies to ensure that the railroads were using the fixed prices set by the South Improvement Company.
Rockefeller bought United Pipelines in 1872. He soon saw the value of the low-priced transportation, and, by 1876, he controlled one half of all existing pipeline. With help from his ties in the railroad business, he bought out his main competitor in the transportation business, Empire Transportation Company. After he bought Empire Transportation, he controlled nearly all of the pipelines in America. However, in 1879, independent oil companies in Pennsylvania created the Tidewater, a joint project to build pipelines, which they would own and control. Rockefeller began discrediting Tidewater, as his men secretly bought stock in the company. He took control of Tidewater in 1882, and Rockefeller then controlled all of America's pipelines.
His control of the pipelines gave Rockefeller many advantages. During oversupplies of crude oil, he could easily dictate the price he wished to pay. The oilmen would either sell to him at low rates, or earn nothing at all as their oil spilled to the ground. Rockefeller's foremost goal, however, was to make as much money as possible. This led to price wars with competitors. Since Rockefeller could set the prices of his expenses on nearly all aspects of the oil industry, competitors in a target area stood no chance against Standard Oil. Rockefeller knew that he needed to set prices, on a global scale, as high as he could without drawing new competition. He set his prices high, but not too high.
In 1890, Congress passed the Sherman Antitrust Act. The act forbade abusive monopolies and restraining trade. This obviously presented a problem to the Standard Oil Company, which was a blatantly abusive monopoly. In 1911, the United States Supreme Court found Standard Oil to be in violation of the Sherman Antitrust Act and ordered the Standard Oil Company (New Jersey) to break ties with 33 of its associates. This ultimately killed the Standard Oil Company's monopoly. Rockefeller was left to retire to Florida, where he eventually passed away. During his life, he donated a huge amount of his profits to churches and many other charitable organizations which he formed.